Dragon Oil, the Dubai-based exploration and production company, posted a 16 per cent fall in operating profit for last year as an increase in production failed to offset higher costs. The company, which is 54 per cent owned by the Dubai Government, said 2014 operating profits fell to US$578.6 million from $687.7m the previous year as it was hit by rising sales costs and charges from exploration drilling in the Philippines.
The cost of sales rose by 9.24 per cent to $357m in 2014 the company reported while Dragon took a $24m impairment charge from well exploration at its Baragatan-1A well, off the Philippine island of Palawan.
Nonetheless, the company said that overall net profit increased by 27 per cent to $132.3m, beating analysts’ forecasts, boosted by an income tax credit after an over-provision the previous year.
Dragon Oil, said that it planned to offset the effect of weaker crude prices by ramping up the amount of oil it drills by about 10 per cent or more in 2015 to finish the year producing an average of 100,000 barrels of oil per day, mainly at its Cheleken project in Turkmenistan.
The company said that it planned to complete 15 to 20 wells a year in 2015 and 2016, which would help it to continue to produce this volume of oil for a minimum period of five years from 2016.
Dragon Oil reported that its average realised crude oil prices fell to US$81 per barrel last year compared with US$91 a barrel in 2013.
At the same time revenues rose by 4 per cent to stand at US$1.09 billion, driven mostly by a 17 per cent increase in the volume of crude oil sold.
“With 14 development and appraisal wells completed in 2014 as well as solid field performance, we grew average gross production in the Cheleken Contract Area by 6.8 per cent to 78,790 barrels of oil per day,” said Dragon Oil chief executive Abdul Al Khalifa.
“Drilling accelerated significantly in the second half of the year allowing us to exit at 92,008 barrels of oil per day – well above our expectations of 87,000 to 90,000.”
The company, which last month announced that it would be cutting its capital expenditure budget from $677m last year to between $500m and $600m, reported a dividend of 36 cents, up 9 per cent on the previous year.
In December the company abandoned an agreed £491.5m (Dh2.74 billion) takeover bid for Dublin-based Petroceltic, a deal that was aimed at helping Dragon Oil diversify its oil and gas interests away from Turkmenistan.
The company, whose shares are listed on the London and Irish stock exchanges, said the collapse in oil prices meant that the deal no longer made sense.
lbarnard@thenational.ae
lbarnard@thenational.ae
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